TWR — New Bitcoin ATH $41k!
Don’t fight the Fed. Don’t fight Bitcoin.
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Exactly one cup of berries, a banana, one tablespoon of peanut butter, a dash of cayenne pepper (because I randomly decided to try it out of the blue on Monday), and dark coloured SAXX boxers. From my morning smoothie to the colour of my underwear, I’ve been very superstitious as to not mess with the animal spirits behind Bitcoin this week. You’re welcome. Lots to unpack today — let’s get started.
I’ve been doing this for a pretty long time. I was one of the first high volume digital asset brokers in Canada back in 2017 where if you wanted to buy Bitcoin in bulk you had to send a wire to a sketchy international bank, close your eyes, and pray that it landed. Sure, that was only three and a half years ago (feels more like 30) but so much has changed since. The Bitcoin narrative has evolved and what was once incredulous is now seemingly prudent and welcomed.
Bitcoin caught the attention of sophisticated investors and institutions late 2017 — it was hard to ignore. Comparisons to Tulip Mania were the norm and who could blame anyone for thinking that way — it was retail madness. However, it was enough to catch everyone’s attention and when the bubble quickly burst and Bitcoin trended down and sideways during a long “crypto winter” the skeptics were quick to put it aside and get back to the real world. The believers got to work.
Leaders in the space went to battle with regulators paving the way for more transparent rules and guidelines. Household names like Fidelity took reputational risks building the infrastructure required to support institutional involvement. Companies like Grayscale and 3iQ went through the ringer to get their funds launched on major stock exchanges so that investors could easily enter the market. Exchanges got a chance to breathe, tidy up technical debt, and build better banking relationships. These are just a few examples of the level of maturation the industry went through over the past couple of years.
Then COVID-19 hit us last year and the macro backdrop globally, became ripe for scarce assets that would benefit immensely from unprecedented levels of central bank intervention. As smart money started researching where they should be allocating capital amidst rapid currency devaluation, Bitcoin found its spotlight… and we were ready.
What we saw at the desk
This week was a record week for us in every way. We were getting 10–20 high value referrals per day this week — keep in mind that we don’t do any paid advertising. We do not face retail, these are investors or companies coming to us by word-of-mouth and who are looking to buy large amounts of Bitcoin and other digital assets. It has been gangbusters on the buy-side and a ghost town on the sell-side. Two weeks ago we announced that we hit $60M in total trades — we’ve done over $20M in trades since.
The brunt of transactions this week came from new entrants to the market. We noticed that new entrants were buying mostly Bitcoin — amazing. It was refreshing to see that most had their hardware wallets in hand or in transport to take delivery of their coins post-transaction.
We saw sizeable moves into ETH and other alt coins from other clients who are expecting a prosperous alt season following the broad cryptocurrency market cap breaching $1TR for the first time in history this week.
To summarize, the desk saw a nascent amount of sell-side pressure with over 90% of the buy-side action into BTC. An update from large miners: they’re not selling.
UPDATE: Major news from US Treasury OCC
It’s really hard to write about stablecoins right now. I’ve had to change the title of this article three times this morning from “Bitcoin Tries $40k” to “Bitcoin Breaches 40k” to “New Bitcoin ATH $41k!” I digress.
Early December I wrote about potentially damaging implications that could stem from a regulatory crackdown on stablecoins. If the aforementioned bill passed, any service provided in relation to these types of cryptocurrencies would become illegal without first receiving approval by multiple government bodies. On Monday, US Treasury OCC, the largest US banking regulator, came out with new guidance allowing US banks to use public blockchains and dollar stablecoins as a settlement infrastructure in the US financial system. This is a huge win for crypto.
In short, the new guidance says that banks can treat public blockchains and stablecoins as payments infrastructure similar to ACH, SWIFT, and FedWire. This is a big deal.
Slowly but surely, these new payment networks are entrenching themselves deeply into the global financial system. In time, hopefully this means we can see stablecoins like USDC or GUSD replace the antiquated money moving systems that are currently in place.
This is just another step forward in global acceptance and a stamp of approval from one of the toughest regulators that true innovation should not be stifled.
What does this mean for Bitcoin? The CEO of Strike, Jack Mallers put it beautifully earlier this week when he said:
“Don’t bet against an open network, it’s going to win every time.”
In case you missed it…
- Bitcoin gets long term target of $146k at JPMorgan https://seekingalpha.com/news/3648768-bitcoin-gets-long-term-target-of-146k-jpmorgan
- Grayscale says interest is rising from pension and endowment funds https://ca.finance.yahoo.com/news/grayscale-holds-over-3-bitcoin-211237408.html
- OCC regulator implements groundbreaking cryptocurrency guidance https://www.forbes.com/sites/haileylennon/2021/01/04/occ-regulator-implements-groundbreaking-cryptocurrency-guidance-for-banks-and-the-future-of-payments/?sh=5228f4d27e9d
- ***Stone Ridge 2020 Shareholder Letter*** https://www.microstrategy.com/en/bitcoin/documents/stone-ridge-2020-shareholder-letter
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Satstreet serves private Canadian clients including some of the largest Bitcoin mining operations, institutions, and high net worth individuals. Satstreet has raised initial funding from Round13 Capital and several prominent investors.
